USD/JPY: Outlook remains positive – UOB

USD/JPY keeps the constructive stance unchanged and could extend the upside momentum above the 107.00 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘upward momentum remains lackluster and while USD could edge above the major resistance at 107.00 from here, it is unlikely able to maintain a foothold above this level’. Our expectation did not materialize as USD eased off after touching 106.94. Upward momentum has dissipated and for today, USD is likely to trade sideways between 106.50 and 106.95.”

Next 1-3 weeks: “We turned positive USD last Thursday, 25 Feb when it was trading at 105.90. In our latest narrative from yesterday, we highlighted that ‘further USD strength is not ruled out’ and that ‘the next resistance is at 107.00’. USD subsequently rose to 106.88 and from here; a breach of 107.00 would not be surprising. That said, lackluster shorter-term momentum suggests the pace of any further advance is likely to be slow and the next resistance at 107.35 may not come into the picture so soon. Overall, the current positive outlook for USD is deemed intact as long as 106.00 (‘strong support’ level previously at 105.65) is not taken out.”